WTI OIL Outlook: Strong bearish sentiment keeps oil price below $50 but technical correction may precede fresh extension lower
|US CRUDE OIL
WTI oil holds in red for the third straight day and hit new low at $48.12 (the lowest since Sep 2017) on Tuesday, after strong bearish signal was generated on eventual break and close below psychological $50 support on Monday.
Oil prices enjoyed little help from hopes that decision for output cut from main oil producers would stabilize oil market.
Short-lived recovery stalled at $54.50 zone, with subsequent weakness being supported by rising fears of oversupply and fall in global stocks.
Since the production cut will start from next month and Russian and the US output holds near record highs, near-term action sees risk of further weakness.
Repeated close below $50 pivot would open way for extension towards strong support at $45.46 (Fibo 61.8% of $26.04/$76.88, 2019/2018 rally).
Meanwhile, bears may consolidate before continuing lower, as slow stochastic is oversold on daily chart and momentum turns up.
Broken $50 level now acts as solid resistance which should ideally cap, but stronger upticks towards falling 10SMA ($51.29) cannot be ruled out.
Focus turns towards US crude inventories reports due today and Wednesday, which could provide fresh signals.
Res: 49.40; 49.87; 50.00; 50.54
Sup: 48.12; 47.44; 46.22; 45.46
Interested in Oil technicals? Check out the key levels
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